Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
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Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#2Glad to see Tom's blog on HN - as usual a great write up. A number of us have been chatting about this for several months now, and the take is fairly sober.
Meta commentary but I've grown weary of how commentary by actual domain experts in our industry are underrepresented and underdiscussed on HN in favor of emotionally charged takes.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#3TLDR: Lucent was committing various forms of accounting fraud and had an unhealthy cash flow position, and had their primary customers on economically dangerous ground. Nvidia meanwhile appears to be above board, has strong cash flow, and has extremely strong dominant customers (eg customers that could reduce spending but can survive a downturn). Therefore there's no clear takeaway: similarities but also differences. Risk and a lot of debt as well as hyperscalers insulating themselves from some of that risk... but at the same time as lot more cash to burn.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#4I think we are at the PS3/Xbox 360 phase of AI.
By that I mean, those were the last consoles where performance improvements delivered truly new experiences, where the hardware mattered.
Today, any game you make for a modern system is a game you could have made for the PS3/Xbox 360 or perhaps something slightly more powerful.
Certainly there have been experiences that use new capabilities that you can’t literally put on those consoles, but they aren’t really “more” in the same way that a PS2 offered “more” than the PlayStation.
I think in that sense, there will be some kind of bubble. All the companies that thought that AI would eventually get good enough to suit their use case will eventually be disappointed and quit their investment. The use cases where AI makes sense will stick around.
It’s kind of like how we used to have pipe dreams of certain kinds of gameplay experiences that never materialized. With our new hardware power we thought that maybe we could someday play games with endless universes of rich content. But now that we are there, we see games like Starfield prove that dream to be something of a farce.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#5Some great insights with some less interesting in there. I didn’t know about the SPVs, that’s sketchy and now I wanna know how much of that is going on. The MIT study that gets pulled out for every critical discussion of AI was an eye roll for me. But very solid analysis of the quants.
How much of a threat is custom silicon to Nvidia remains an open question to me. I kinda think, by now, we can say they’re similar but different enough to coexist in the competitive compute landscape?
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#6Some great insights with some less interesting in there. I didn’t know about the SPVs, that’s sketchy and now I wanna know how much of that is going on. The MIT study that gets pulled out for every critical discussion of AI was an eye roll for me. But very solid analysis of the quants. How much of a threat is custom silicon to Nvidia remains an open question to me. I kinda think, by now, we can say they’re similar bu…
> How much of a threat is custom silicon to Nvidia remains an open question to me
Nvidia has also begun trying to enter the custom silicon sector as well, but it's still largely dominated by Broadcom, Marvell, and Renesas.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#7Glad to see Tom's blog on HN - as usual a great write up. A number of us have been chatting about this for several months now, and the take is fairly sober. Meta commentary but I've grown weary of how commentary by actual domain experts in our industry are underrepresented and underdiscussed on HN in favor of emotionally charged takes.
> actual domain experts
Calling a VC a "domain expert" is like calling an alcoholic a "libation engineer." VC blogs are, in the best case, mildly informative, and in the worst, borderline fraudulent (the Sequoia SBF piece being a recent example, but there are hundreds).
The incentives are, even in a true "domain expert" case (think: doctors, engineers, economists), often opaque. But when it comes to VCs, this gets ratcheted up by an order of magnitude.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#8Where can you track GPU utilization rates? Assuming private data but curious if not.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#9Looking at the last chapter of the essay, there was a lot of illegal activity by lucent in the runup to the collapse. Today, We won’t know the list of shady practices until the bubble bursts. I doubt Tom could legally speculate, he’d likely be sued into oblivion if he even hinted at malfeasance by these trillion dollar companies.
Re: Circular Financing: Does Nvidia's $110B Bet Echo the Telecom Bubble?
#10I worked at a mom and pop ISP in the 90s. Lucent did seem at the forefront of internet equipment at the time. We used Portmaster 3s to handle dial up connections. We also looked into very early wireless technology from Lucent.
Something I wanted to mention, only somewhat tanget. The Telecommunications Act of 1996 forced telecommunication companies to lease out their infrastructure. It massively reduced the prices an ISP had to pay to get T1, because, suddenly, there was competition. I think a T1 went from 1800 a month in 1996, to around 600 a month in 1999. It was a long time ago, so my memory is hazy.
But, wouldn't you know it, the Telecommunication companies sued the FCC and the Telecommunications Act was gutted in 2003
https://en.wikipedia.org/wiki/Competitive_local_exchange_car...